Newsletter
DOI APPROVAL NO LONGER REQUIRED FOR DERIVATIVES INVESTMENTS
On 18 April 2003, the Ministry of Finance (MOF) formally announced the Self-Regulatory Rules for Insurance Companies' Trading in Derivative Products. Now when insurance companies in-vest in domestic securities they may also trade in derivative products related to the same securities, based on their risk hedging needs; and when they make investments in accordance with the Regu-lations on Overseas Investments by Insurance Companies, they may also trade in derivative products related to such investments, based on their risk hedging needs. In both cases, they no longer need to apply to the MOF Department of Insurance (DOI) for permission. An insurance company that trades in derivatives must put in place internal procedures for handling deriva-tives trading, approved by its board of directors. The director of the DOI states that if insurers make investments outside the scope allowed by the rules, the DOI will use its discretionary power to ban such investments.